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After a tumultuous four months, Andrea Jung’s 12-year run as chief executive officer of Avon Products Inc. ended with a sigh.
“As I end my tenure, what a privilege it’s been to serve as Avon’s leader for the past 12 years,” Jung told the sparsely filled auditorium of shareholders at the company’s annual meeting Thursday morning. There wasn’t even a round of applause for the woman whose mere presence, in the past, was enough to rouse thousands of Avon sales representatives in a standing ovation, and whose name regularly landed on business magazines’ list of the most powerful executives in the world.
[Thursday evening, Bloomberg News reported that Richmont Holdings is preparing a bid to buy Avon.]
At the company meeting, Jung, dressed in a black suit, introduced herself to the crowd — filled mostly with board members, company executives and retirees — as the new executive chairman. She quickly turned the focus to Avon’s new ceo Sheri McCoy, who joined the beleaguered direct seller on April 23 from Johnson & Johnson.
“We have found the right leader to take Avon into the future,” said Jung, who led the meeting and whose usual magnetic stage presence was hampered by dim lighting and a somewhat more subdued presentation. She praised McCoy for her turnaround track record, strategic and operational skills and her motivational capabilities.
Jung fielded a handful of questions from shareholders, several of which were sharp in tone. One attendee asked how many shareholders approved Avon’s executive compensation, which was up for vote at the meeting, adding, “I wasn’t one of them.” The lone Avon sales representative in attendance scolded Avon — for the second year in a row — for “an egregious lack of social networking tools,” including the ability to “like” certain Avon products on Facebook or to be able to text fellow representatives and customers. “This is what word of mouth sounds like today and our tongues are tied,” he said, noting that two of the 10 key selling tools that Avon provides its reps include carbon-paper credit card payment forms and paper brochures. Jung responded that 80 percent of reps place orders digitally, but acknowledged “there’s lots of work to do.” She said McCoy and her team will place digital opportunities at the forefront of their strategy.
“I look forward to continuing to offer you my support,” Jung told McCoy. The new ceo spoke briefly at the meeting, continuing the same themes she outlined to analysts during the company’s earnings call on Tuesday. It’s been a trying week for the company, as first-quarter profits dove 81.6 percent to $26.5 million, and Avon warned that its performance could worsen in the second quarter.
“I’m taking a fresh look at every aspect of the business,” McCoy told shareholders. “I will develop a list of five to six key priorities.” On Tuesday, McCoy said she plans to sketch out her strategy for Avon during the company’s next earnings call, which is slated for August.
“The company continues to believe strongly that its issues are fixable,” said Jung, who since December has faced intense scrutiny from Wall Street analysts and former company ceo’s, as well as an endless stream of bad press.
Coty Inc., which has made its interest in acquiring Avon very public, continues to attract an audience with shareholders, according to industry sources. Coty’s hope is that shareholders will put pressure on Avon’s board to engage in talks about a possible buyout. Coty has not revealed how long it plans to court shareholders, and may consider other ways to move its business forward. Sources said prior to its $10 billion bid for Avon on April 2, Coty spent several months working with an investment bank to actively prepare for an initial public offering. Earlier this week, several Wall Street analysts said that Avon’s poor first-quarter performance could encourage Coty to keep its bid on the table a bit longer.